The benefits of the emissions trading mechanism for Italian firms: a multi-group analysis

Purpose - The purpose of this paper is to test the impact of internal and external environmental management (EM) on performance to verify the emission trading (ET) mechanism's effectiveness. It aims to investigate whether EM that is carried out by ET firms has a higher influence on performance than EM that is carried out by no-ET firms. Design/methodology/approach - A conceptual model is drawn up based on the existing literature in green supply chain management (GSCM) and is tested on a large sample of Italian firms. A multi-group analysis in structural equation modeling allows for the estimation of the impact of internal and external EM on economic and environmental performance over the two groups. Findings - Firms under ET regime do not perform better than no-ET firms environmentally or economically; moreover, environmental collaboration is significantly less effective for ET firms. Research limitations/implications - Although the ET mechanism has been introduced by the European Union to combat and reduce the emissions, research has shown its marginal effectiveness. Data comprises only data about Italian firms. Items in the questionnaire allow for a two-year lag period. Interviewed firms have been selected according to EM criteria only. Practical implications - Firms subjected to the ET mechanism should find more effective and efficient practices to improve their environmental performance because the ET is marginally beneficial. Originality/value - The findings supply insights to managers about the real effectiveness of ET as well as to decision planners for the development of future sustainable mechanisms.